UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16117 / April 21, 1999
SECURITIES AND EXCHANGE COMMISSION v. GARY D. HOKE, JR.,
Civ. No.
99-04262 (LGB) (Ex)
The Securities and Exchange Commission (“Commission„)
today filed a complaint in federal district court in Los
Angeles, California, against Gary D. Hoke, Jr. (“Hoke„) of
Raleigh, North Carolina. According to the allegations in
the Commission’s complaint:
* Hoke disseminated to the investing public fraudulent
statements concerning PairGain Technologies, Inc.
(“PairGain„), a public company whose shares are traded on
the National Association of Securities Dealers Automatic
Quotation System. Specifically, on the morning of April
7, 1999, Hoke, under an assumed name, posted a message on
a World Wide Web page that falsely reported that PairGain
was being bought by an Israeli company.
* That posting provided a direct internet link to another
World Wide Web page, which appeared to be a Bloomberg
News Service page containing an announcement of the
acquisition. This web page was not an authentic Bloomberg
page, but was, in fact, a fake page that Hoke himself
created and posted.
* The publication of this false Bloomberg report created
significant trading activity in PairGain securities and
caused the market price of PairGain securities to
increase substantially. After the report was exposed as
a hoax, the price of PairGain securities declined
precipitously.
The Commission’s complaint charges that Hoke’s actions
constituted the manipulation of the price of publicly
traded securities in violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5
thereunder. The Commission seeks permanent injunctive
relief and a civil money penalty from Hoke.
The Commission’s Division of Enforcement acknowledges the
assistance of the Office of the United States Attorney
for the Central District of California and the Federal
Bureau of Investigation.